If finalized, the rule would subject PFAS, for the first time, to the Superfund liability and cost recovery scheme, and greatly enhance the number and pace of site cleanups involving PFAS contamination. Known as “forever chemicals” due to their resistance to breaking down in the environment and widespread presence in soils and water (and people), PFAS have been widely used in a variety of fire resistance, thermal insulation, water-proofing and other applications in products ranging across textiles, cookware, food packaging, fire-fighting foams, and cosmetics, among many others. Manufacturers of PFAS-containing products may very well have properties contaminated by these chemicals (which readily move into and reside in soils and surface and ground waters) and may face extensive cleanup costs through regulatory or private party actions.

Superfund Liability

Specifically, EPA’s proposal would designate two PFAS, perfluorooctanoic acid (“PFOA”) and perfluorooctanesulfonic acid (“PFOS”), and their salt and structural isomers, as “hazardous substances” under CERCLA. The CERCLA designation, if finalized, will expose a whole host of potentially responsible parties — current and former owners and operators of PFAS-contaminated facilities; generators and arrangers of PFAS disposal, treatment or transportation; and transporters that take PFAS to a site of their choosing for disposal or treatment — to liability for cleaning up PFAS-contaminated sites. PFAS manufacturers, military installations, airports, water treatment facilities and landfills are just a few of the entities that may be subject to PFAS liability under CERCLA.[3] Additionally, federal entities that transfer or sell their property will be mandated to provide notice about the storage, release, or disposal of PFOA or PFOS on the property as well as provide a covenant (a legal requirement in the deed) warranting that the property has been cleaned up from previous contamination or will do so if discovered in the future.[4]

Reporting Requirements

The proposed rule also imposes new reporting requirements for PFOA and PFOS releases that “meet or exceed the reportable quantity” of one pound or more within 24-hours of release. However, the rule leaves in place all reporting exemptions, including for federally permitted releases and the de minimis exemption.

Consequences

Superfund cost-recovery actions often involve dozens of parties in years-long litigation fighting over the scope of the cleanup, the appropriate cleanup level, and, of course, allocation of costs. The Proposed Rule highlights several areas of uncertainty:

[F]uture discretionary decisions about cleanup and response are difficult to quantify due to numerous, significant uncertainties such as: (1) How many sites have PFOA or PFOS contamination at a level that warrants a cleanup action; (2) the extent and type of PFOA and PFOS contamination at/near sites; (3) the extent and type of other contamination at/near sites; (4) the incremental cost of assessing and remediating the PFOA and/or PFOS contamination at/near these sites; and (5) the cleanup level required for these substances.

EPA notes in its press release that it “will use enforcement discretion and other approaches to ensure fairness.”

Next Steps

The Proposed Rule is available here. EPA anticipates publishing the Notice of Proposed Rulemaking in the Federal Register soon, initiating a 60-day comment period. EPA also intends to issue in coming days an Advanced Notice of Proposed Rulemaking that will address the anticipated CERCLA listing of at least some of the over 9,000 separate PFAS chemicals currently in existence. Likely candidates include GenX, perfluorobutane sulfonic acid, perfluorobutyrate, perfluorohexanoic acid, perfluorohexane sulfonate, perfluorononanoic acid and perfluorodecanoic acid.

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[1] The Press Release is available at https://www.epa.gov/newsreleases/epa-proposes-designating-certain-pfas-chemicals-hazardous-substances-under-superfund.

[2] See more at https://www.kelleygreenlawblog.com/2022/08/pfas-and-tri-more-lots-more-to-come/. It is also worth noting that this is the first time EPA has proposed to designate hazardous substances directly under CERCLA § 102(a), signaling the Agency’s expansionist posture on PFAS regulation.

[3] CERCLA § 107(a) 42 U.S.C. § 9607(a). The CERCLA legal infrastructure has been aptly nicknamed by practitioners as the “polluter pays” principle.

[4] This is also required under CERCLA § 120(h).

On March 21, the U.S. Securities and Exchange Commission (SEC) unveiled its long-anticipated draft proposed rules for mandatory climate disclosures that would align the United States with other developed economies, particularly the EU and the UK, which have focused on financial disclosures related to climate change as a useful tactic to promote environmentally-conscious policies.

At an open meeting, the SEC proposed rules to significantly expand and standardize registrants’ climate-related disclosures for investors. The proposed rules would employ mandatory, prescriptive disclosures in periodic reports and registration statements to address topics related to greenhouse gas (GHG) emissions and global climate change.

Under the proposed rules, companies would disclose their own direct and indirect GHG emissions, known as Scope 1 and Scope 2 emissions. The rules would also require companies to disclose GHG generated by suppliers and partners, known as Scope 3 emissions, if they are material or included in any emissions targets the company has set.

While materiality remains a touchstone for the majority of the proposed rules, certain disclosures—including GHG emissions—are now mandatory regardless of the circumstances. These disclosures are required to be incorporated into existing SEC filings, rather than a separate climate-focused document. The SEC has also provided for an extended roll-out of the rules (see below), with full compliance not expected for several years, and has also incorporated safe harbor provisions related to certain disclosures, notably for Scope 3 GHG emissions.

SEC chair Gary Gensler said the agency was responding to investor demand for consistent information on how climate change will affect the financial performance of companies they invest in. The proposed rule would require disclosures on Form 10-K about a company’s governance, risk management, and strategy with respect to climate-related risks. Moreover, the proposal would require disclosure of any targets or commitments made by a company, as well as its plan to achieve those targets and its transition plan, if it has them.

See below highlights of the proposal, which are subject to public comment.

CLIMATE-RELATED RISKS

CLIMATE RISK GOVERNANCE

GREENHOUSE GAS EMISSIONS

GHG emissions data are increasingly being used as a quantitative metric to assess a company’s exposure to—and the potential financial effects of—climate-related transition risks. Those risks could include regulatory, technological, and market risks driven by a transition to a lower greenhouse gas emissions economy, with potential financial impacts on revenues, expenditures, and capital outlays.

In short, all filers would be required to disclose their Scope 1 and Scope 2 GHG emissions—emissions that “result directly or indirectly from facilities owned or activities controlled by a registrant.” Moreover, the proposal would phase in Scope 3 disclosures after Scopes 1 and 2; a new safe harbor would be available for Scope 3 disclosures; and smaller reporting companies would be exempt from Scope 3 disclosures.

The core elements of the proposed rules also would apply to international filers on Form 20-F.

CLIMATE TARGETS, TRANSITION PLANS

CLIMATE FINANCIAL REPORTING

PHASE-IN PERIOD

Large Accelerated Filers:

• Fiscal year 2023 (filed in 2024) for all proposed disclosures excluding Scope 3 GHG emissions

• Fiscal year 2024 (filed in 2025) for (i) Scope 3 GHG emissions disclosures (if required) and (ii) limited assurance attestation of Scope 1 and Scope 2 GHG emissions disclosures and

• Fiscal year 2026 (filed in 2027) for reasonable assurance attestation of Scope 1 and Scope 2 GHG emissions disclosures.

Accelerated and Non-Accelerated Filers:

• Fiscal year 2024 (filed in 2025) for all proposed disclosures excluding Scope 3 GHG emissions

• Fiscal year 2025 (filed in 2026) for (i) Scope 3 GHG emissions disclosures (if required) and (ii) for accelerated filers only, limited assurance attestation of GHG emissions disclosures (non-accelerated filers would be exempt from the attestation requirements) and

• For accelerated filers only, fiscal year 2027 (filed in 2028) for reasonable assurance attestation of GHG emissions disclosures.

Smaller Reporting Companies:

• Fiscal year 2025 (filed in 2026) for all proposed disclosures other than Scope 3 GHG emissions disclosures (smaller reporting companies would be exempt from the requirements to provide Scope 3 GHG emissions disclosures or independent attestation).

CONCLUSION

The comment period for the proposed rules will remain open for 30 days after publication in the Federal Register, or 60 days after the date of issuance and publication on sec.gov, whichever period is longer.

Here, the Court finds that the Disclosure Program, which dictates a new set of rules governing the types of ingredients that must be disclosed, the manner of their disclosure, and imposes a new requirement mandating that each disclosure be accompanied by a certification of its completeness and accuracy, constitutes a clear rule and not a mere interpretative statement without any legal or binding effect.

While NYDEC has the option to appeal the ruling, it would seem that the most appropriate course of action would be for NYDEC to undertake a real rulemaking process and engage with stakeholders to craft a more workable program. The failure of NYDEC to listen to stakeholder input resulted in substantial concerns about the Disclosure Program, including the lack of consistency with the California Cleaning Product Right to Know Act (which requires the first set of on-line disclosures by January 1, 2020).

Further information on the New York Disclosure Program can be found at www.dec.ny.gov/chemical/109021.html.

However, as an analysis of the bill prepared for the legislature notes, "the Attorney General may be unaware of pending appeals that address issues of statewide concern with respect to the enforcement or interpretation of Prop 65." The current bill would correct that situation and afford the AG the opportunity to weigh in with the court regarding the state's interest in any particularly significant issues raised by the case.

While the legislation appears worthwhile, it is yet another example of California tinkering with various elements of the Prop 65 program -- such as the massive set of new regulations adopted in 2016 regarding the mechanics of how to provide Prop 65 warnings -- while failing to address the fundamental problems with the program: namely, the difficulties associated with deciding when and whether to provide a warning, particularly when faced with the prospect of having to defend a determination not to warn in court against a private plaintiff who knows that it will cost a business less to settle the matter than proceed with litigation.

For purposes of Proposition 65, Nickel (soluble compounds) are defined to be compounds of nickel with solubility in water of greater than 0.1 moles per liter (mol/L) at 20oC. This definition is consistent both with the discussion by the DARTIC that led to the listing of Nickel (soluble compounds) (available at https://oehha.ca.gov/media/downloads/proposition-65/transcript/101118dartictranscript.pdf) and OEHHA’s prior definition of soluble nickel compounds in the 2012 document, “Nickel Reference Exposure Levels: Nickel and Nickel Compounds; Nickel Oxide” (available at https://oehha.ca.gov/media/downloads/crnr/032312nirelfinal.pdf).

Proposed in June 2018, the exemption embodies OEHHA's response to widespread backlash against a California court decision in favor of the plaintiff, the Council for Education and Research on Toxics (CERT), holding that dozens of coffee-serving defendants in the state violated Prop 65 by failing to provide warnings about exposure to acrylamide, despite the fact that the bulk of the science shows that drinking coffee does not increase cancer risk. CERT is seeking millions of dollars in fines against the coffee roasting/retail defendants, though the penalty phase of the litigation has been put on hold pending resolution of the exemption rulemaking. Finalizing the exemption, however, may not be the end of the case, as a CERT challenge to the legal sufficiency of the exemption also is pending in California court.

The OAL has until February 19 to review the regulation, and its accompanying "final statement of reasons," including response to comments, and decide whether to accept, reject, or request further information from OEHHA.

For further information on the proposed exemption, please see my prior post from June 2018: http://www.kelleygreenlawblog.com/2018/06/california-acts-decaffeinate-cancer-warnings-coffee/

The result has been a program that -- while it has achieved some notable reformulation successes and, perhaps most significantly, focused needed public and corporate attention on the chemicals found in consumer products and the workplace -- ultimately is failing at the goal of providing the public with useful information about chemical risks and actual dangers. When it seems like Prop 65 warnings are everywhere, the meaning of those warnings lose their impact and undermine any credible sense of the term "risk."

Enter the Accurate Labels Act ("ALA"), federal legislation sponsored by Sen. Jerry Moran (R-KS) and Reps. Adam Kinzinger (R-IL) and Kurt Schrader (D-OR). The legislation, which was introduced (as HR 6022 and S 3109) in the Spring, would require that any state-mandated "covered declaration" (e.g., a warning requirement on a product label) be based on sound science and proper risk assessment. Specifically, the ALA would require that warning requirements and similar mandatory labeling be "risk-based," supported by the “best available science," and subject to “appropriate weight of the evidence review.” Significantly, the legislation would place the burden of proving, by a preponderance of the evidence, these elements on the party (government or private plaintiff) seeking to enforce a warning requirement in court.

Such a shifting of the burden of proof would reverse the signature aspect of Prop 65 that makes the law so frustrating for businesses and promotes the filing of so many frivolous nuisance suits: that is, when confronted by a plaintiff's data showing potential low level exposure to a listed substance, Prop 65 requires a defendant to prove in court that the exposure level is "safe" (at great cost and effort) or face stiff penalties. This is true even if the defendant's choice not to provide a warning is supported by a gold-plated risk analysis. Hence, because of the heavy burden of proof on the defendant (with the attendant litigation costs), plaintiffs are incentivized to file a multitude of lawsuits often on dubious grounds and with no evidence of actual risk in the hope of extracting a quick settlement, a solution that many businesses see as far cheaper than "fighting the good fight." The ALA, by placing the burden on the plaintiff to show that a warning is required due to an actual risk, would steer Prop 65 lawsuits in a more meaningful direction, and away from the "quick buck" settlements that account for the vast majority of cases that are filed.

In doing so, perhaps most importantly, the ALA could make Prop 65 warnings meaningful and reflective of scientifically-based (and common sense) notions of "risk," and eliminate much of the misinformation that has come to define the program.

The legislation has strong support from the industry-basked Coalition for Accurate Product Labels, but, like most legislation will face significant hurdles in the path to adoption, particularly in light of expected strong opposition from the California delegation.

Human epidemiological studies provide evidence that persistent night shift work is associated with an increased risk of breast cancer and mechanistic and other related studies provide evidence that circadian disruption plays a major role in the cancer pathway in humans.

A peer review public meeting will be held October 5th in Research Triangle Park, NC to review the Draft Report on Carcinogens Monograph on Night Shift Work and Light at Night (dated August 24, 2018). Public comments or requests to make an oral presentation at the public meeting must be submitted by September 21st.

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The headlines read like something out of The Onion, but both the U.S. National Toxicology Program (NTP) and the International Agency for Research on Cancer (IARC) are undertaking reviews to assess whether working at night poses a cancer risk. Scientifically speaking, the agencies are examining whether practices that disrupt circadian rhythms, such as "light at night" (LAN), for which night shift work is viewed as a proxy, are associated with an increased cancer risk.

While neither NTP nor IARC have direct regulatory authority, both agencies often are cited as "authoritative bodies" for identifying carcinogens under regulations implemented by EPA, OSHA, and other agencies, as well as California Proposition 65.

In fact, this is IARC's second look at the issue in the last decade: in 2010, the Lyon, France-based organization classified “shift work that involves circadian disruption” as probably carcinogenic to humans (Group 2A). That conclusion was based on (1) "limited evidence in humans for the carcinogenicity of shift work that involves night work," and (2) "sufficient evidence in experimental animals for the carcinogenicity of light during daily dark period (biological night)." On August 14, IARC announced that it would once again examine the association between cancer and circadian disruptions caused by shift work, and has requested that relevant studies and other information be submitted by May 6, 2019.

Meanwhile, in May, NTP released a protocol outlining its approach to preparing the cancer hazard evaluation for a draft Report on Carcinogens (RoC) monograph on "Night Shift Work and Light at Night." The aim is to assess "whether scenarios associated with exposure to modern electrical light practices that lead to circadian disruption, including light at night (LAN), shift work at night, and transmeridian travel, are associated with cancer risk." Following a 2012 nomination for NTP to consider listing "shift work involving LAN" in the RoC, NTP convened an expert workshop in 2016 which recommended examining the “health consequences of electric lighting practices in the modern world." NTP explains in the protocol document that

The rationale for this recommendation was that electric light acts as both an effector (based on direct effects on circadian disruption and melatonin suppression, and animal models and human studies of light pollution and indoor light), and as an enabler, allowing what were once daytime activities to be conducted 24/7. And thus, electric light as both an effector and an enabler of additional activities or behaviors (e.g., shift work), may lead to circadian disruption.

• Do a significant number of people residing in the United States work night shifts? • Are a significant number of people residing in the United States exposed to LAN? • Should night shift work be listed in the RoC? If so, how should it be defined? • Can we define the underlying exposures related to circadian disruption? • Should LAN be listed in the RoC? If so, how should it be defined?